PAC fears more public funds abused

Revelations that about K260.7 billion in public funds could not be accounted for in the 2013/14 financial year have prompted Parliament’s Public Accounts Committee (PAC) to suspect that more money than previously disclosed in audits was stolen.

Members of PAC expressed their concern in Lilongwe after meeting a team from the Ministry of Finance, Economic Planning and Development to wind up scrutiny of the 2013/14 financial reports from the National Audit Office (NAO) and start analysing expenditures for the 2014/15 financial year when President Peter Mutharika and his Democratic Progressive Party (DPP) administration came to power.

Matambo (2nd R)explaining a point to the committee

PAC vice-chairperson Kamlepo Kalua, who chaired the meeting at Parliament Building, expressed the sentiments in an interview after meeting officials from the Accountant General on the Auditor General’s report for the accounts of Malawi Government for the year ended June 2014.

In the report, the Auditor General observed that the financial statement for Vote 271 for the Accountant General’s Department did not include some accounts with balances which added up to K260 billion in the 2013/14 financial year.

Consequently, the 2014/15 financial year Auditor General’s report also observes that K260 681 365 251.43 was not accounted for in bank accounts.

In the report, the unaccounted for bank accounts listed, as reflected under Reserve Bank of Malawi (RBM) statements, were not reflected in the financial statements of both the Treasury and the Accountant General.

In the year under review—2013/14 financial year—the country woke up to revelations of plunder of public resources, widely referred to as Cashgate. Financial analysis of Malawi Government accounts later established that K577 billion covering 2009/14 could not be reconciled before another audit revised the amount later to K236 billion while the Auditor General’s report now shows K260 billion.

In his reaction, Kalua said: “There is no truth at all in what they [government] are saying. That money still stands because if you take K236 billion and K260 billion, which is associated with Cashgate and other years and add to this, it exceeds the K577 billion.”

He said the revelation in the Auditor General’s report could be the tip of the iceberg as much more money is lost.

Said Kalua: “We [the committee] have asked for further reporting on this issue. The Accountant General says there is a net loss in 2014 of negative K1.8 trillion and in 2015 slightly reduced to K1.39 trillion. Our budget is K1.3 trillion, meaning that we do not have a budget. Something is seriously wrong in Malawi.”

During the meeting with PAC, Accountant General William Matambo acknowledged the observations on the unaccounted for K260 billion, but said the money did not originate from his office only despite appearing under Vote 271. He said the amount was consolidated for various government ministries, departments and agencies (MDAs).

He said: “The observation of K260 billion is correct. This, however, was not and is not unusual of these accounts, although they are in the name of Accountant Generals Department. They are really for the entire government. Up until now, government operates pool accounts.”

Matambo said as a control measure, his department is undertaking initiatives which include reconciliations which were not done.

“In the 2015/16 year, financial statements are based on fully reconciled statements. We are in our second year of preparing our accounts of fully reconciled statements.”

During the meeting, Auditor General Stevenson Kamphasa said even though money appears under the Accountant General’s vote, the justification provided was not convincing.

The shooting of former Ministry of Finance budget director Paul Mphwiyo outside the gate of his Area 43 residence in Lilongwe on the night of September 13 2013 is widely believed to have exposed revelations about the plunder of public resources at Capital Hill, widely known as Cashgate.

Former president Joyce Banda, who ascended to the presidency on April 7 2012 in line with constitutional order following the death of Bingu wa Mutharika, ordered a forensic audit which British firm Baker Tilly undertook covering a randomly chosen period of six months, between April and September 2013.

The Baker Tilly audit established that about K24 billion was siphoned from public coffers through dubious payments, inflated invoices and goods or services never rendered.

In 2015, a financial analysis report by audit and business advisory firm PricewaterhouseCoopers (PwC) also established that about K577 billion in public funds could not be reconciled between 2009 and December 31 2014. The K577 billion figure was later revised downwards to K236 billion in another forensic audit.